Xcel Energy management blamed for Monticello cost overruns

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Monticello nuclear power plant

A group of nuclear and financial experts hired by utility regulators in Minnesota found that management at Xcel Energy did not completely understand or adequately plan for replacing major reactor components at the Monticello nuclear power plant.  The investigation found that Xcel did not properly manage contractors and also blamed the NRC for some of the delays that lead to the cost overruns.

Mark Crisp, one of the nuclear experts hired by the state Commerce Department gave his assessment of the way Xcel managed the project in written testimony saying, “The confusion, contradictory information to the NRC and start-stop process suggest management indecisiveness and strategic planning that, at best, was not adequately thought out.”

According to Dave Sparby, chief executive of Xcel’s operations in Minnesota, the utility will file a reply to the issues raised by the investigation within the next month.

Over the last five years, Xcel has upgraded reactor pumps, the turbine and other components in order to increase the power output by 13% and keep the plant online for at least twenty more years.  Despite the ongoing upgrades, the plant will not likely operate at the increased output until 2015 or 2016.

The state investigation was launched in 2013 by the Public Utilities Commission after it was determined that the project would greatly exceed cost projections.

In 2008, Xcel estimated that it would cost some $320 million to replace major components that would allow the plant’s life to be extended and also increase the power output, but by 2013 the price tag had more than doubled to $665 million.  It is estimated that the final price tag will be almost $750 million, the largest cost overrun of any public utility project in Minnesota.

Xcel is pushing utility regulators to make ratepayers liable for the entire cost of the upgrade project including the cost overruns by requesting for a 10.4% rate hike over two years.  It is likely that Xcel will push for even more rate increases in the coming years.  If ratepayers are not left on the hook for the upgrade overages, Xcel’s earnings could end up suffering instead.

Source: Star Tribune

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